Ghana could increase its earnings from mining and oil with greater transparency – report

Ghana has taken important steps to improve mining governance and limit corruption, but the government still fails to give citizens the information they need to make sure they are getting a good deal from mining companies, according to a new governance index released on Tuesday. 

The Revenue Watch Institute’s Resource Governance Index measures the quality of governance in the oil, gas and mining sector of 58 countries worldwide.

Each country on the Index, from top-ranked Norway to last-place Myanmar, is judged on four criteria: legal framework, transparency levels, checks and balances and its broader governance context.

Ghana ranked 15^th out of 58 countries and earned the highest score in sub-Saharan Africa, reflecting major reforms to improve competition and transparency in the mining sector.

However, while lawmakers are required to oversee the industry, they often lack the resources to do so effectively, and contracts between mining companies and the government are still kept secret from the public.

“The lack of systematic access to information on the licensing process and contract terms leaves a black hole in the information citizens need to make sure that that government is getting a good deal and that companies are paying what is due”, said Emmanuel Kuyole, Revenue Watch’s Regional Coordinator for Africa.

 

Ghana’s Index score applies to the country’s mineral sector only, but researchers noted major efforts by the government to improve transparency in the growing oil and gas sector as well.

Ghana has signed on to the Open Government Partnership and the Extractive Industries Transparency Initiative (EITI). It now includes both petroleum and mining revenues in its EITI reports.

“Ghana’s participation in the EITI has contributed remarkably to the information available on the sector, such as production, prices and revenues, and the distribution of royalties to district assemblies”, Kuyole said. “The weaknesses identified in these reports have led to fiscal reforms designed to increase revenues. We now need to ensure that the regular and timely publication of EITI reports is enshrined in law”.

The Index offers recommendations for even the highest-ranking countries, and notes specific areas where Ghana could improve. The government has already published some contracts with oil companies, and should make it a priority to publish mining contracts as well.

Ghana still has not passed a freedom of information law that guarantees access to important information on the oil and mining sector, a critical issue that the Open Government Partnership is working to address.

Index researchers also noted the need for clear guidelines and information on the 10 percent share of mining royalties that are managed by the District Assemblies and traditional authorities in mining communities.

Similarly, the Mineral Development Fund, which receives a further 10 percent of mining royalties, is not currently covered by regulation, leaving it vulnerable to mismanagement

Finally, in order for mining projects to fully benefit communities, the government must encourage local content policies that help transfer important skills to communities and develop local businesses so that there is a lasting impact on the economy. In addition to local development programs, communities should be fully involved in and have access to environmental and social impact assessments.

“The Index analysis not only shows where we are now, but points out ways forward for countries, companies and global initiatives, and this matters because improved governance in natural resources is arguably the development challenge of this decade”, said Daniel Kaufmann, President of Revenue Watch Institute.